March 20, 2025
In the first post of this series, we laid the groundwork for understanding class action litigation, covering the fundamental elements that define these cases, including:
We also introduced the role of economic experts, emphasizing how their damage assessments and economic models are essential in establishing and quantifying financial harm across a large group of claimants or rebutting claims of economic damages.
This second post takes a closer look at the involvement of economic experts in class action litigation, either for the class or the defendant. We’ll explore how financial experts can be used from certification to settlement, focusing on the advanced methodologies used to quantify class-wide damages. Additionally, we’ll discuss some of the challenges experts face in demonstrating commonality and reliability, including the standards required for admissibility of the expert’s opinions in court. Finally, we’ll examine how experts play a key role in settlement negotiations and courtroom dynamics while presenting complex economic analyses.
Economic experts play a critical role throughout class action litigation, from initial assessments to final settlement or trial. Their analysis supports or rebuts the class’s claims by providing evidence of financial harm and establishing a framework to measure class-wide damages, if any. Below, we delve into the specific methodologies, strategic challenges and contributions of economic experts, focusing on how they shape litigation outcomes and assist courts in making informed decisions.
Certification Phase: A central task of economic experts in the class certification phase is to develop or rebut models for assessing potential damages across the class. Experts are retained to determine if there is a “common impact,” i.e., whether class members experienced harm in a similar way, through statistical analyses and economic modeling. Establishing a reliable common impact framework is fundamental for meeting the “predominance” requirement under the Federal Rule of Civil Procedure 23(b)3[1]. In other words, the named plaintiffs must demonstrate, “that the questions of law or fact common to class members predominate over any questions affecting only individual members.”[2]
For purposes of Rule 23(b)3, damages need to be capable of measurement on a class-wide basis, and the model needs to measure damages resulting from the injury on which the liability is premised.[3] Economic experts use statistical and econometric models to establish this alignment, often tailoring their methods to account for class-wide impacts in consumer, antitrust or wage-and-hour cases.[4]
By way of example, in Comcast Corp. v. Behrend, plaintiffs filed a class-action antitrust suit against Comcast. The plaintiffs’ financial expert submitted a damages theory based on the assumption that all four of the plaintiffs’ original theories of antitrust injury were valid but failed to distinguish between the different theories of antitrust impact.[5]
The U.S. Supreme Court ruled that, at the class-certification state, “any model supporting a plaintiff’s damages case must be consistent with its liability case.”[6] As such, a model that serves as evidence of damages must measure damages attributable to the theory of harm.
Damage Assessment and Class-Wide Models: Economic experts often develop class-wide damage models using methodologies like statistical sampling or econometric modeling to estimate overall financial harm. These models provide courts and litigants with insights into the scope of potential liability, helping assess whether class actions are a practical vehicle for resolution.
For example, in Re Rail Freight Fuel Surcharge Antitrust, a group of shippers filed a class action against four major freight railroads for imposing rate-based fuel surcharges for shipments over their tracks.[7] On appeal, the court ruled that the predominance requirements demand that plaintiffs “show that they can prove, through common evidence, that all class members were in fact injured.”[8]
The decision highlights the challenges experts face in proving common impact and underscores the importance of rigor in analytical techniques to ensure financial models do not yield, for instance, inaccurate or unsupportable conclusions. Reliable damage assessments are essential not only for meeting legal standards but also for informing settlement discussions or trial strategies.[9]
Data Collection and Cleaning: Accurate data collection underpins credible analysis. Economic experts gather records from plaintiffs and defendants (e.g., sales, payroll or customer records) and may supplement this with third-party data. Experts often independently analyze this data to ensure data reliability.
Federal Rule of Evidence 702 establishes the standard for admitting expert testimony in Federal Court and State Courts which have adopted the federal rules of evidence. This rule focuses on an expert’s qualifications and the relevance and reliability of the analysis. In class action litigation, economic and financial experts are often called upon to provide their expert opinion on key issues like commonality and damages, where clear and methodologically sound testimony can be critical to the court’s evaluation of class certification
Regression Analysis and Econometric Modeling: Regression models can help identify trends and quantify impacts of variables like price changes or product defects. Specifically, “regression analysis quantifies statistical relations among data measures and provides estimates of how much one measure changes when another measure changes, holding other influences constant.”[13]
Experts often segment large volumes of data into subgroups to increase precision of the analysis. The Reference Guide on Multiple Regression from the Federal Judicial Center offers a detailed framework for using regression analysis effectively in legal contexts, ensuring methodologies are transparent and results are reproducible.[14]
Hedonic Models and Specialized Techniques: Hedonic models, which might be used to quantify damages in product liability or environmental class action cases, estimate damages based on diminished quality or value. For instance, they might quantify the reduced value of a defective product.
Commonality vs. Individualized Impact: Demonstrating uniform applicability of damages can be challenging, especially in class action matters involving securities or employment / wage-and-hour disputes. Experts may use statistical sampling or extrapolation to aggregate harm while preserving class-wide commonality. One example of experts helping with commonality is Tyson Foods, Inc. v. Bouaphakeo, where the use of statistical sampling to establish commonality in class actions was explored.[15]
Settlement Valuation and Scenario Analysis: Economic experts can also help assess potential settlement values by estimating damages under different scenarios.
Administrative Costs and Feasibility: Financial experts also estimate administrative costs for verifying and distributing award claims, ensuring disbursement logistics are practical. This involves considering attrition, unclaimed funds, and designing allocation models.
Testifying and Communicating Clearly: Economic experts simplify complex financial analysis for judges and juries, using plain language and logical narratives. Connecting technical findings to real-world impacts enhances credibility.
The Federal Judicial Center publishes many guides to assist with expert testifying. These guides emphasize strategies for translating complex economic models into accessible narratives and providing approachable discussion methods for expert testimony.[17]
Strategic Use of Visuals and Summaries: Visual aids like charts and tables can be useful in simplifying an expert’s complex financial analysis. Effective visuals strengthen testimony and help finders of fact grasp intricate details.
Economic experts play a critical role in class action litigation, providing objective analyses that help courts and litigants navigate complex financial issues. Whether supporting plaintiffs in demonstrating class-wide harm or assisting defendants in challenging methodologies and limiting exposure, their contributions are critical to ensuring fair and accurate economic outcomes. From crafting reliable damages models to presenting clear and defensible testimony, independent financial experts enhance the litigation process by providing clarity and credibility to Class Action litigation.
For more information on services related to class action litigation, including facilitating equitable resolutions, reducing uncertainties or contributing to efficient and data- driven case management contact Cristal Brun at cbrun@vertexeng.com or Adam Rhoten at arhoten@vertexeng.com.
The Author
Adam Rhoten has extensive experience in determining economic damages in federal and state courts and assisting in arbitration. He specializes in calculating damages related to infringement of patents, misappropriation of copyrights, theft of trade secrets, and other commercial disputes involving intangible assets.
The Author
Ms. Brun brings over 20 years of experience in forensic accounting investigations, commercial damages, litigation consulting, corporate finance, auditing, and strategic advisory for publicly-traded, closely-held, and public sector entities. She has led multiple engagements across a broad variety of industries and Fortune 500 firms.
